U.S. Bancorp Is Entering S. Calif. with $314M Deal

U.S. Bancorp Is Entering S. Calif. with $314M Deal

Article excerpt

In a deal that would provide entree to Southern California and ramp up its small-business lending effort, U.S. Bancorp said it has agreed to buy Bank of Commerce for about $314 million in stock.

The pact, announced late Thursday, would bring U.S. Bancorp one of the nation's top Small Business Administration lenders. It would also give the Minneapolis-based banking company 10 full-service bank branches in the burgeoning Southern California market.

"Bank of Commerce saw an opportunity over 20 years ago to respond to the needs of small business," said John F. Grundhofer, U.S. Bancorp's chairman and chief executive officer. "They more than responded, they excelled."

San Diego-based Bank of Commerce will "expand our relationships" in that market, he added.

Analysts said the deal, which is set to close in the second quarter, marks a significant change in U.S. Bancorp's acquisition tactics.

In the past, the $76 billion-asset company has considered beefing up its West Coast operations with a splashy acquisition, analysts said. Rumors have swirled about talks with Wells Fargo & Co., Union Bank of California, and Washington Mutual Inc.

But with major targets unavailable or unattractive, the banking company will have to satisfy its West Coast aspirations with numerous smaller deals, said R. Jay Tejera, an analyst with Dain Rauscher Wessels in Minneapolis.

"U.S. Bancorp had been the elephant hunter looking to add a major franchise in California, but this deal makes it look like they're now pursuing an aggregation strategy," Mr. Tejera said. "You can expect them to do a number of smaller transactions to build out the franchise."

U.S. Bancorp already operates 89 bank branches and 110 automated teller machines in California, concentrated in the San Francisco Bay area and regions north. Bank of Commerce's branches are in San Diego and Orange counties. …